Microsoft Settles Priceline Suit

10 January 2001

Reuters reports that a lawsuit brought by Priceline.com against Microsoft Corp. and its majority-owned online travel company Expedia Inc. has been settled, the companies said on Tuesday.
The lawsuit, filed in October 1999 in the U.S District Court in Connecticut, alleged that Microsoft had infringed on a Priceline patent by creating a price-matching system for hotel rooms on the Expedia web site.
Under the settlement announced on Tuesday, Expedia will continue to offer the price-matching service but will pay a royalty fee to Norwalk, Connecticut-based Priceline. The companies also said the settlement would not have a “material impact” on either business.
Other details of the arrangement are confidential, the companies said. In 1998, Priceline began a novel system for selling airplane tickets, in which customers name their own price and airlines either accept or decline the offer. Priceline now offers similar services for hotels, long distance telephone calls, and loans.
Priceline had claimed that a similar price-matching service offered by Microsoft`s Expedia Web site infringed on its patents.
When Priceline`s founder Jay Walker, who has since left the company, confronted Microsoft Chairman Bill Gates about the matter in the summer of 1999, Gates became very agitated and suggested that Priceline could “get in line with all the others” suing the Seattle-based software giant, according to court documents.
Priceline rode the Internet stock boom in 1999, but has since fallen on hard times, cutting workers and postponing plans for selling new products, including life insurance and cellular phone service.——-